very rare sight inside the briefing room. two presidents addressing concerns about the economy. former president bill clinton talked about the people excepting principled compromise. that is what we will be talking about buying the first 45 minutes this morning. give us a call if you want to get involved in the conversation. for republicans, 202-737-0001. for democrats, 202-737-0002. for independents, 202-628-0205. if you have called in the last 30 days, today's the day to send us an electronic message. the e-mail address is journal@c- span.org and did you are following us on twitter that address is twitter.com/c-spanwj. on the front page of "and the new york post" this morning --

"bubba steals white house from obama." by an "the los angeles times" the article says -- host: also this morning, " the baltimore sun" from "at the

tribune washington bureau," -- host: we want to talk about what the former president and president had to say about principled compromise. this is what he had to say about the news conference yesterday at the white house. >> the one thing that always happens when you have divided government is that people live longer see the bided compromise

as weakness. this system was set up to promote principled compromise. it is the ethical thing to do in a democracy where no one is a dictator. we would be in a state of constant paralysis that once the house was divided there was no compromise. host: we are talking about the former president's comments of principled compromise made yesterday at a briefing in the white house. our first call comes from tennessee. caller: i guess my message is more for the democrats. i cannot believe that after four years of complaining about republicans not compromising, calling themselves liberal,

calling the republicans the party of no, i am a democrat. but what the democratic congress and senate to know that i am ashamed of them for doing the very same thing and expecting our president not to compromise. with them, independent, or republicans. this is supposed to be america. one nation. that is the reason i claim affiliation with the democrats. because i thought that's what they were standing for. host: where do you think the copper why should be?

caller: i like what was done. at first, initially, to be mean , there was fire for everyone. since we have deficit concerns, let everyone pay their part and do not even discuss it. i saw that if we wanted to be civil americans and republicans said this tax increase would be a job stopper, let them show us. host: we are talking about the former president's comments on principled compromise.

california. caller: bottom line, bill clinton went to the white house to endorse the bush tax cuts for the rich. if you are not in accord with the clinton-obama-mcconnell bill, you are not a friend, you are a splinter. it is strange to read the sitting president head off to a christmas party and have bill clinton coming back to show of how good he is. host: do believe that the republicans, the democrats, the white house and the congress, are they close it to a compromise?

caller:. you would have to ask the congressman. is there move. they threw a temper tantrum like a bunch of adolescence. host: jeff, neb., good morning. if you turn down your television this process will work easier. we are going to move on to jacksonville, florida. jeff, democratic line. good morning. what do you think about president clinton's comments on principled compromise? caller: we are in one of the worst messes i have ever seen living here. my opinion is you have millions

of people out of work right now. it is going to take longer than 12 or 13 months to put these people back to work. 13 months of unemployment benefits. they will do the tax cut for everyone. that is fine. that is what they're going to do. what will happen in 13 months when the democrats have to go back to the table? i think you are still going to have high unemployment in 13 months. once the republicans have their two year tax cuts, but will they use to bargain with it then? i have been unemployed numerous times since 2000 flood.

it has been a real struggle for my family. but there are people out there, i watched these arguments between republicans and democrats. there are people that use their unemployment checks to buy groceries and pay their bills. host: buy and "financial times" this morning bill clinton asks for support and it's the continued anger from democrats. barack obama received a high- profile endorsement and agreement from former president clinton.

host: vernon, new york. caller: the greatest prosperity this country has seen it ever was under bill clinton with the republican congress. we had a surplus. democrats are complaining about this hostage-taking thanks from republicans. if you want something good path, you have got to take garbage. host: the issue from the

beginning, what lessons my current president obama learn from clinton if he wants to move forward? caller: you cannot get things done if it is going to be my way or the highway. as soon as bush got in, what happened? obama is following the same foot steps as bush. host: ralph, independent line. go ahead. caller: one thing that has always been true about bill clinton is that even though he was called a raving democrat, he was really little of the road. so the most principled things he

ever sponsored were basically republican bills that he managed to push through a democratic congress through the means of compromise. there is nothing surprising about coming out here to support the meld that president obama is supporting. in fact, had obama not left congress in the hands of mrs. pelosi, a lot more probably would have been passed. there is nothing surprising about bill clinton and trot -- trying to it that people take a principled compromise. host: president also talked about understanding where the house is coming from, but that they were wrong. >> i have an enormous amount of

respect for the democrats in the house. i get where you are coming from. i can only tell you that my economic alices it is -- given the alternatives, this is the best economic results for america. it is an enormous relief for america to think that both parties might vote for something, anything they could agree on. there is no way that you could have a compromise without having something in the bill that you do not like. i do not know that i could influence anyone. yes, i go some places and i can, but all i can do is tell you what i think. host: we are talking about principled compromise, the term used by bill clinton yesterday

in his news conference with president obama. the headline this morning in "the washington journal." host: pennsylvania, pillhead. caller: thank you for ebony on the show. i wanted to make a quick comment about principled compromise.

mr. clinton supporting mr. obama, we do need to have compromised. i agree with what former president clinton said about having compromise. you cannot have everything you want in washington. i think it is a good deal and mr. obama is doing the best that he can. host: cook seville, tennessee. caller: the democrats have controlled the hut was for the last three or four years. they never, never compromise with republicans at all. when they got a health care bill, they did not listen to republicans at all. when 50% of the people said that

we did not want this, they never compromised. now they are forced to. democrats are still loading this up with pork. it should be an up and down vote. no extra things attached to it. it is the right thing to do for the american people. host: where is the first place they should use some inroads for compromise? when john maynard becomes the speaker of the house, but should be the first in road of compromise? caller: i do not think this is a good bill, it will lead more to the deficit and people like that

do not want this. i have seen people's health insurance premiums go sky-high. some people are paying $1,000 per month just for health insurance. it is really out of sight. it is because the health care bill is driving us to it. host: lee roy, baltimore, maryland. caller: good morning. i think that having president clinton there with president obama was a good thing. president obama is new. you go to the person with experience and you take from their experience because they have been there and done that. i do not expect everyone to get everything they want, but in by compromise and make sacrifices.

i think it was that wise decision for him to go to president clinton to seek advice on things that need to be done host: from "-- need to be done. host: from "washington journal" this morning --

host: back to the phones. nevada, kenneth, go ahead. caller: thank you for taking my call. i want to be brief. first of all, there is no such thing as a compromise when once i get everything they want, namely the republicans. this is a continuation of the wholesale sellout of the progressive base that started under clinton. the 2% cut is just an attempt to push social security. the president is going to come out in june or july and is going to say that there are austerity

measures for things that never happened around the world. i think that people need to be aware of this. you never hear the republicans say that we should move to the middle or the right. we need to continue to fight for the middle man. host: we will be talking about cuts in spending later in the program with chris edwards. he will be joining us to talk about amongst other things there institute web site, downsizing government with recommendations for cuts. he will be done in about 25 minutes. on the front page of "the philadelphia inquirer" the lead story this morning --

host: the next call comes from hot springs, arkansas. what do you think about the former president's comments about principled compromise? caller: i would not compromise on either side. i think they need to not compromise on anything until

after the first of the year. the republicans, the ones that got us into this, i read -- i rarely feel so sad about my party. but we need to go back to afghanistan when everything was running well before the jobs were sent overseas to china. i work for 28 years in the packaging and supply business. everything came from china. wal-mart only purchased american products in the 1970's and 1980's. then it would change the things to say made in america. i believe that everyone should rebel against the republicans and democrats. host: among other things the

former president talked about yesterday in the news conference was the economy. he called it in bad shape but he had advice for avoiding a mexican standoff. >> if we had 5% growth and everything was dropping like a rock, maybe you could have a mexican standoff. that is not the circumstance that we face. the united states has suffered a severe financial collapse. these things take longer to get over the normal recessions. we must first make sure that we keep getting over it. we do not want to slip back alpine. in order to make it happen over the long run, we have to go beyond direct investments to

private growth. but to get there, we have to achieve a higher level of growth that it triggers confidence. personally i believe this is the best deal that could be gotten under the circumstances. host: that was the former president, bill clinton, talking about principled compromise. massachusetts, what do you think? caller: compromise is pushing each other around. they have to come together. when bush was in, democrats went against him. going back and forth all the time. my health care, they put me on medicare last year. it would cut and i had to purchase a second policy to

protect what they did not cover and i had to get one for my wife, because she is younger. by hundred dollars for love because of health insurance. they have got to change this bad boy attitude against each other and come together in a peaceful way. host: on our twitter line -- host: back to the phones. pennsylvania, go ahead. caller: good morning. i am a strong supporter of mr. clinton and his ideas. mr. obama came into office with promises of transparency as well

as getting rid of people who are basically puppeteers. especially with the oil and fuel situation. he has not done. when it comes to negotiating, mr. obama continuously gives away the store. one example is the health care situation. the first day of may in 2009 there was nothing for public option people. it was basically moving right along towards we are going to support private industry as far as health care goes. and in the summer of 2009 all that we heard from the republicans was that panels. we were reaching out to them constantly over the last 16 months. it demands hand was bitten as

many times all -- in a man's hand was beaten that many times all there would be left would be a bumper and napalm -- thumb and a palm. host: how would the republicans go about changing things in in january? caller: whenever the republicans' takeover, that will be sure to put more idealism and harder programs going through against us as far as democrats go. i do not see much success happening. since the democrats are in charge, we should bargain for better options.

at the same time i also believe that if i give up what i am getting in tax breaks, equal to about once in which each day. host: the next call comes from new orleans, louisiana. caller: good morning. i think it is interesting, the way the issue is framed. there are three directions. one is the notion of principled compromise. it is more like opportunistic compromise. we often hear that the electorate is outraged. i think that is another misdirection. the electorate is not angry and outraged. the electorate is engaged. they are paying attention to the deficit. to the great debts that we have to unfunded programs taking place.

the third misdirection is the notion that people with $250,000 are rich. they are called business people. i am not aware of people that are not rich that hire other people work for them. this is misdirection at its worst. at the end of the day we have president clinton, obviously he has reemerged, an amazing thing to hear him talk about principled compromise. republicans are not helping the situation. host: secretary of state hillary clinton said friday --

host: wheat continue our discussion on principled compromise, the phrase the former president used yesterday at the white house. the next call comes from james coming from georgia. caller: good mornin my unemployment was exhausted at 60 weeks. i put myself through college to make the best use of the time that i have. i am concerned that big businesses and corporations have trillions in the bank that they have had for decades and they

have not released any to do any building with. because they are being given this tax break again. thank you. host: what kind of compromise between the administration and house and senate republicans would benefit your situation as a struggling student? caller: i do not believe that a compromise is possible on the basis of what that one. i watched the filibuster of set -- senator sanders the other day. i believe he had the best outlook. you like they did in the great depression years ago. building new highway. building a bridge. fix things in america that are broken. host: thank you for your call. jackson, mississippi.

bill, go ahead. caller: it should not surprise anyone depth bill clinton supports this. he was known for running along the bad policies from the republicans during his administration. many of the problems we are having knelt is a result of pan am working with republicans the without bad policy. the repeal of glass-stiegel is largely responsible for the meltdown we have on wall street. and of course, nafta was signed by him. once republicans got a democratic president that could persuade a few republicans, we are still suffering because of nafta. robert gibbs said it the other day in a press conference. why did they go along with the estate tax part of it? his answer was -- it was no

secret, we did it because that is what the republicans required. once they get to that point, they will roll you over on every issue. barack obama said the other day that they were not going to budge, so they had to. these are long-term consequences because the republicans' goal is to be treasury. they do not care. as long as they get the money out and a disproportionate amount goes the rich people, they can cut these social programs. we have got to wake up and understand not to just kill along with these things. if they hostage taker knows that you will always give in, they will always take hostages.

host: republican line, south carolina. good morning. they should have had this bill signed a long time ago. instead they've waited and came up with this compromise. months ago before we were running up against people with unemployment they ran these bills together so that a book like compromise but it was only set up to look that way. host: why has it taken so long to get to this point? caller: just like all of the other bills he has done, with health care he did not have single payer except for the rich insurance companies. host: taking a break from our

conversation regarding principal compromise to talk about other items in the news. this one comes from brent abrams. host: back to the phones. our discussion on canceled compromise. caller: good morning. this is the real ronald from lynchburg.

it occurs to me that bernie sanders was amazing in that he has called attention to his ideas but what he did. looking at what the president did and it is distressing to me. the president has two roles. it would appear that he just abandoned or abdicated the role of leader as the democrats, caucused with republicans, came up with a plan that was the republican plan, brought it back and pushed it on the democratic party. he has now spread his public lobbying to lambaste and get the democrats to come over to a compromise and take or leave the republican plan to be presented. what is amazing, what would a true leader of the democratic

party use that other than educating the american people excoriating republicans to go along with tax cuts for every one up to $250,000, saying to them that you have got to change. he would be lambasting republicans, making the country see that they were the ones that were holding up the rest of the legislation. all because they supported tax cut where we borrowed money for the super rich. host: do you see the president fighting for the people and fighting for his party has the same thing? caller: yes in one sense.

if he believes the economic views of the democratic party, the idea that we have got to defend the research that shows that tax cuts for the rich are the worst kinds of stimulus, if he believes those democratic views are the right and proper way, the best way to get our economy growing again, yes, of voting for and advocating for it is the same thing as advocating for the country. obviously that is why you take a particular position. the idea that we would borrow money and give it to the rich, increasing the debt that everyone will have to pay, seemed crazy to me. going back to the history that we had during the depression, they borrowed money, but they used to buy things. things that would benefit the

entire population that was going to pay for it. host: we will leave it there. pat, louisiana, you are on. caller: i was wondering, on these bills that republicans have blocked, did harry reid not use reconciliation to get those pasteurella host: -- get those past. -- past? host: i do not recall anything like that. caller: getting an extension of the bush tax cuts as a compromise, what would have worked better would have been like tax incentives where people making over $1 billion for job creation -- also against unemployment to put people's needs more for entitlements to make them complacent, it just

makes them silent. host: why are tax incentives better than tax cuts? caller: to many people are making a large amount of money without doing anything with it. i do not see anything happening with that in these unstable market conditions. i would rather see people give a tax cut if they do job creation or do something with that those dollars. host: more regarding senator bernie sanders and his filibuster yesterday. senator bernie sanders took to the floor of the senate to share his thoughts about the tax-cut plan. after the sun had set and most of his colleagues had gone home, he was still sharing about taxes, a bad trade, deals, and

kirk's on wall street. you can see more of his filibuster on the floor of the senate on our web site. you will be billed to stream at their. you will be able to see when we plan on be playing it throughout the weekend. back to the phones. independents, arkansas. caller: that is independence, oregon. host: what did i say? caller: arkansas. host: ok. go ahead. caller: a couple of quick facts. people making $250,000 per year tax that 40% make $12,250 per month. people making 50% of all -- $50,000 for your tax that 30% makes $3,000 per month.

people making the federal minimum wage at $7.25 per hour with no stop -- with no tax make quelled hundred $60 per month. tell me who is -- make $1,250 per month. tell me who is rich into is not. -- who is rich and who is not. host: efforts defeated for the second time this year -- host: "the washington post" had this for their beat editorial this morning --

host: back to the phones and our discussion on principled compromise. shannon, pennsylvania. democratic line. caller: i am calling because this bill is a bad bill because it undermines social security. people will be putting one-third less into the social security fund than they are right now. when this is done, the republicans will say that social security as damaged goods. and then they will try to undermine social security with privatization. remember what happened when they

privatized the phone company? you cannot let this happen to social security. host: we believe that there. this morning, "the philadelphia inquirer it --

host: next is new jersey. good morning. what did you think about the former president's comments yesterday on principled compromise? caller: i agree with that sentiment, but the fact that he had to come to the white house i feel really was sort of a bad move on the president's part. i think that it shows incredible weakness. it's like that he has to go back the dead to get him to -- it's like that he has to go back to daddy could get endorsement. he should stand on his own two feet. if he wants comments from a former president, he should call them on the phone. host: later this afternoon we will be covering the funeral services for elizabeth edwards. they write that john edwards does not plan to speak.

kate edwards, 28, will take the pulpit. host: more details on that on our website upper c-span.org -- on our website, c-span.org. caller: i enjoyed senator filibuster last night. we should make him president. both parties have been destroying this country under reaganomics for the past 30 years. it is a proven failure. all that we are doing is turning our country into a third world latin-american nation beholden to china, saudi arabia, and global corporations. host: in about 45 minutes we

will be talking about the future of the democratic party. but coming up next, a discussion about reducing spending to balance the budget. today is saturday, september -- december 11. you are watching "washington journal." ♪ ♪ >> in london, students rioted over higher tuition, politicians debated the debt crisis. this month, a "q&a" expands to two programs with interviews

from london. tonight, stephanie flanders. tomorrow, matthew paris. >> this weekend on "after words," noah feldman, felix frankfurter, hugo black, and how the men that began as friends bound up as scorpions -- while in doubt as scorpions. -- welland upper -- well intowou -- nd up -- wound up as scorpions. let's hour -- >> our handsome hardcover edition book, "the supreme court," is that a

special publisher's price from our web site. it gives readers a personal and compelling view of the modern court, but with history and tradition. but address detail the architecture and history. the handsome addition to the bookshelf of any non-fiction reader. for more, though c-span.org to -- for more, go to c-span.org. >> "washington journal" continues. host: chris edwards is the tax policy director at the cato institute. you had this message -- the time

for action is now -- our partisan flight from fiscal responsibility is fast becoming a national disaster. both parties seem to need helping in reducing the burden of government. what is the first step? guest: everyone knows that we have a gigantic deficit problem in this country. that is exploding. if we do not cut spending debt load, -- if we do not cut spending down the road, we are headed towards a greek style that crisis. host: how do you determine where to cut and what to cut? guest: we have gone through every single department line by line and looked at every activity that is damaging and

unfair. we look at programs that are unconstitutional. our general themes are let's get the federal government out of activities that are better with all local activities of all that can be privatized. host: under the plan to cut spending and balance the federal budget, you write that policy makers should have an emergency plan. proposing spending cuts of $1 trillion annually by 2020, balancing the budget without resorting to damaging tax increases. federal spending would be reduced to 18.5% of gross domestic product by 2020 under the plan, compared to president obama's projected spending of 23.5%. where are we currently with the% of gdp that goes towards

spending guest: this year is 25% of gdp, -- spending? guest: this year is 20% -- 25% of gdp. people are right when they look to the fiscal years as being more fiscally responsible. by 2020 our plan would bring spending down to the level of the last two years of president clinton. host: we are talking about reducing spending with chris edwards. if you want to get involved in the conversation, give us a call. for republicans, 202-737-0001. for democrats, 202-737-0002. for independents, 202-628-0205. if you are calling outside of the u.s., 628-0184. one of the largest cuts that you

advocate is defense. how do you make those cuts without sacrificing national security? guest: the qaeda institute's of view is that over expansion around -- the cato institute's of view is that over expansion around the world does not increase safety. we would pull troops out of places like germany, where they have been for many decades. we think that these democracies can defend themselves, they do not need tens of thousands of u.s. troops stationed there. host: in the numbers that we will be showing to route this discussion, but of figures that you are proposing to enact, cuts to troops and programs of $150

billion, where would be the first place that you would want to start with those cuts? afghanistan? iraq? peaceful areas? where is the first place the to go? caller: to put that in context, that is $150 billion per year annually. president obama proposed spending around $1 trillion. we are in a fiscal emergency here. we have seen cuts across the board in every department. the basic idea is that we want to reduce the number of u.s. ground troops back to the level in 2000, which we thought was a more reasonable level. when you reduce the number of troops, reducing the number of bases and facilities that

support those troops, we have detailed all of those programs. host: the first call for chris at words bombs from pennsylvania. matthew, republican line. caller: do you think bedpan sin city would help -- do you think that since city would help congress and the senate? host: let's move on. caller: thank you for showing us bernie sanders yesterday. thank you for the cato institute. the wars in iraq and afghanistan are failed wars witnessing the demise of american culture. we need to continue our economic growth, keep jobs away from china and india.

i have been there. and we need to stay out of pakistan. that is also a failed state. we need to protect the nuclear weapons we have there because we do not want them to become a broke nation. but the united states has too many people out there. of all why are we supporting these military bases? host: chris edwards, co-head. guest: the interesting thing about dispense -- defense is that many conservatives think defense spending is good for the economy and other kinds of spending are bad. really, if we spend too much it drains the economy. draining resources out of the

private sector economy, damaging economic growth in the united states. reduction in defense spending would be good for the economy and would help us compete with china. host: realistically, can you get the cut in defense spending when so many members of congress have manufacturing related to defense? taking jobs out of my district, there is no way i will go for this? cat's-paw -- guest: we dramatically close the defense budget at the end of the cold war. interestingly, many of those old bases were converted to private- sector use and had been very successful. host: greg, independent line. you are on "washington journal." caller: i have been a big fan of

the cato institute. i have purchased many of the constitutional books that they have produced. i would take my hat off to you for those dispense -- defense spending cuts proposed. my problem that i have is that anyone who refers to that gdp, which i do not believe those numbers on the gdp being truly reflective of what it used to stand for, but i understand we are spending close to $1 trillion each year in defense spending and we are taking in roughly 2.7 trillion dollars in taxes. that reflects poorly on us as far as budget managing. i would strongly urge all americans to look at how much

money we are actually spending on defense. guest: this year we will spend $720 billion in the department of defense, but $160 billion of that will go to iraq and afghanistan. if you take out the spending in iraq and afghanistan, the federal defense budget has roughly doubled over the last decade the department of defense has doubled in spending over the last decade. the web site includes severely cutting back on the department of education, ending k-12 subsidies would save it $60 billion in newly. what kind of student aid are you talking about?

guest: college loans and grants. we think the federal government should not have a role in college loans and grants. that should be left to individual borrowing and saving. one of the damaging effects of subsidies is that it causes a tuition inflation at all of the major universities, and then students complained about how tuition across the country and expenses at universities have skyrocketed in recent decades, partly contributor will to the subsidies that we have been pumping into the system. host: it is almost could be argued as a chicken and egg argument. the students will say they need those subsidies and grants because the cost of education is going up guest: most subsidies

that go to the middle-class families -- where does the money come from? it comes from middle-class families taxes. we have this huge transfer system from middle-class taxpayers to middle-class households through subsidies. you do not win by doing that. it ends up damaging the economy. host: back to the phones. nancy is on our line for republicans. nancy, turn down your television, ok? caller: i just read that $30 billion on our social security. i agree with this man here, but you know what?

you need to let the american people be americans. this is not iraq, japan, or russia. everything in this country is not even american any more. host: your figures for cutting back, but price index benefits, reduce those by $60 billion a year and raise the retirement age which would save $33 billion a year what would you raise the retirement age? guest: that is the same recommendation from obama's the school commission. you raise the age of retirement gradually over many decades so young people can adjust and save more. social security is a large federal program. if we don't anything -- if we don't do anything, the program

will not be able to pay out benefits down the road. we should allow people to put more private savings opportunities so they can fund their own retirement. social security is a program where we will have an enormous disparity in the future, where we are heavily taxing young people in order to give increasing subsidies to the elderly. and that is going to be a very unfair situation, where is the burden is all fallen on young people. it is not affordable. >> our client for democrats. jesse, you are on "of the washington journal." caller: i agree with you about cutting defense spending. i am a political science and history major. it blows my mind the amount of

money the country waste on our defense budget. i agree completely with you on there. there are some things i do disagree with you on, and that is the education. if anything, i think that is one of the few things we need to put more money in. especially in the economic. that we are in right now, there are two things that have been proven to help in the recession using keynesian economic theories. you increase government spending and you increase taxes. everybody is so worried about decreasing spending, when in reality right now as a country we need government spending, because right now no one is pending. the public is too scared to spend. host: jesse, we will leave it

there. guest: we have had deficits of over a trillion $3 years in a row now. it has not gotten us much. i think the idea of more government spending helping the economy does not make sense to me. on education, one of my proposed cuts is to eliminate federal k- 12 spending. we have decreased subsidies greatly in recent decades. test scores for our students have not increased. there was a new round of test scores published a couple of weeks ago you have students that are well behind students of other countries. i often point to the example of canada. the federal government does not subsidize their schools. it is a local responsibility in

canada, yet canadian students are the top students -- are some of the top students in the world. i don't think federal education spending is beneficial. i think it is a real negative because you have all of these federal regulations coming down and suffocating innovation at local schools. host: woodland hills, california. caller: thank you for taking my call. my call is about -- it is about the previous guest you had on, but it is about taxes. since and they have two wars, and they are cutting taxes, how about letting the taxes expire? when the money is paid back into the treasury, and then they can cut the taxes. what do you think? guest: i am in favor of

extending the tax cuts from 2001 and 2003. i think it is important for the economy. that has been the historic normal level of revenues in recent decades. i don't think the problem is on the revenue side. i think it is on the spending side. spending has slowed us for the past two years. all kinds of other subsidy programs -- president obama has increased spending even more than president bush. i think we need to get the debt under control. host: we have been sent this twitter message. guest: the super rich are

heavily taxed already. right now in congress, we are fretting over whether to raise that top 35% rate up to 40%. if you go back to the 1980's, the last major tax reform act we had in 1986 which was a compromise between reagan and democrats, wheat chopped it down to 28%. now we are talking about going back up to 40%. i think that is what helped the economy in the 1980 boom. host: you are on the "washington journal." caller: i hear about all these people saying we are spending so much, but it is only 1%.

but if you add up a bunch of those percentages, that really adds up in a home budget like my own. so i agree with this guy, that we need to cut back on a lot of spending just on about everything. i think we need to cut down on a lot of the entitlements that keep a lot of people from going out and burning some money. host: what entitlements are you talking about? caller: we have people out here on unemployment who are sitting around. they are not even trying to find work. they figure three-quarters of a paycheck is better than nothing. i think they need to squeeze them a little bit, take some of their money out of their pockets, and let them hurt a little bit more over the bills.

host: your thoughts? guest: i think he is arguing there is a lot of federal spending programs that are actually damaging, making americans do things that are not very efficient or good for society. there are a lot of examples in the federal budget. one is getting rid of housing subsidies. i think they were part of the reason for the giant housing boom and bust that has caused so much trouble in recent years. take a look at farming subsidies. i think they are unfair and take money from average taxpayers. also, they are damaging to the environment, and environmentalists really do not like farming subsidies because they allow farmers to form on more environmentally-sensitive land. it is those types of programs at

the cato institute that we want to eliminate. host: you also talk about cutting back on block grant medicaid programs. since the repeal of the health- care law which you says will save $87 billion a year, and increasing medicare premiums which would reduce the budget by $57 billion a year. guest: we talk a little bit about social security. a bigger problem is the explosive growth in medicare and in medicaid. medicaid is this joint federal- state program where the federal government pays more than half of the bills, so whenever state governments expand their medicaid program, the federal government chips in more than half of the money. it encourages states to over- expand their programs.

our idea is to do block grant medicaid. give the states a fixed number and let them experiment and innovate with their health care systems. that idea was a successful approach we used with welfare reform in 1996. host: and johnny in south carolina. as i am sorry. brenda and alabama. go ahead. caller: you keep talking about downsizing the government. this has been made dick cheney idea for years. i noticed there was a lot of contracting out for government positions. who did you have to deploy it? there is a lot of waste and fraud in the contract in in the

federal government. that is where a lot of the money goes. that is where you have to look. guest: i agree. and there is a lot of waste in federal contracting. that is why in our plan we focus on true privatization. air traffic control in this country is run by a the faa. frankly, the faa does not do a particularly well job. the alternative is to completely privatize the air traffic control system. both canada and britain have done this. it has worked very well. we can look at contracting out some federal activities, but i think a better idea would be to completely privatize and get it out of the federal budget completely. host: john boehner is on 60

minutes tomorrow and talk about cutting down his own budget by as much as 5%. we will take a look at what he has to say on "60 minutes." >> you said you would bring up a spending-cutting measure every week. pagee don't need a 1000- bills. how about one page? >> give us a little preview. >> well, how about we start with cutting congress? i am going to cut my leadership budget by 5%. i am going to cut all the leadership budget by 5%. and every member is going to see a 5% reduction in their allowance. altogether, that is $25 million or $35 million.

>> that is not a lot. $25 million is not a lot of money. >> we have to start somewhere, and we will start there. guest: he has promised extensive spending cuts next year, has has eric kantor. i don't think they fully recognized how many cuts are needed in the federal budget to get it on a really sustainable path. we have not heard many details from republican leaders. i know from the incoming members that were elected this year are going to propose some very substantial budget cuts. i hope the republican establishment goes along with some of these free market- oriented members of congress. we don't just need cuts in the wastes and earmarks. we have to start thinking about

closing down all federal agencies and departments in the federal government if we are going to tackle the deficit. host: in a recent article, a nobel-winning economist from columbia university argues that for practical purposes -- he was talking about this in a telephone interview. what are your thoughts on that? guest: i think he is completely wrong. saying we need more spending after we have had a deficit spending of over a trillion dollars per year is completely

nuts. i think reducing federal spending would be good for economic growth. i think families and investors are concerned about this exploding debt in washington. i think we need to start cutting federal spending. there is a real-world example of this period of 15 years ago, canada was in a horrible debt situation. the canadian government dramatically changed. they started dramatic spending cuts, which would be the equivalent of a hundred billion dollars in our budget. they dramatically cut their government spending in canada. the economy boomed for 15 years straight. i think spending cuts in the government are consistent with economic growth. host: chris edwards from the cato institute. you were a senior economist with the joint economic committee in

the served as a consultant and manager at price waterhouse coopers, and an economist at the tax foundation. our next call comes from johnny in south carolina. thank you for waiting. caller: good morning, gentlemen. i have a couple of questions. when was the last time you bought something made in america? i ask that to get to another point. guest: it is remarkable how every time you buy something from a walmart, a lot of stuff seemed to be made abroad. that is not necessarily a problem except that i know we have a lot of policies in the united states that unfortunately scare's out investment and pushes it investment offshore. for example, we have one of the

highest corporate income taxes in the world. our big companies, caterpillar, dupont, intel -- it tinkers them to set up their manufacturing abroad. we need to reform the corporate income tax. that is the kind of change we need to make to bring manufacturing back to america. caller: you would agree then that our biggest problem is jobs and people paying taxes guest: absolutely critical arco bouquet. it does not take a genius to figure this out. what we need to do as a country -- listen up, america. do it as a first-come basis. that would save a bunch of money. the next thing we need to do -- anybody that makes anything out of a country, you need to tax them to death or either bring

jobs back. don't buy it. would you agree to that? we cannot do that either. we would rather take care of everybody else. you caught all of our social programs. host: johnny, we are going to leave it there. guest: i think the best economic program is strong economic growth, and i think we get that by encouraging the private sector to invest and to expand. i think there are a lot of federal activities now that discourage the private sector from investment. i argue dead a lot of other nations with right of center politics -- they have cut their business taxes because they realize high taxes in the global economy, you shoot yourself in the foot. i think we need to cut down our corporate income tax. business it would buy more

equipment, and when businesses have more equipment, they need to hire more workers. the way to get that on implement rate down is to invest in businesses again. host: what are your thoughts about cutting -- guest: i think it is increasingly clear that shoveling out government money for foreign aid projects has not worked. it seems to me the countries that have grown explosively in recent decades particularly in asia are the ones that did not get foreign aid. countries like taiwan, singapore, and korea have grown strongly because of policies, not because they got foreign aid from the united states. host: we have been sent this twitter message. guest: again, we sort of touched

on this. high-income americans pay an enormous share of the american tax load it. the tax rates on high-income people are higher than they were back in the 1980's under a bipartisan agreement. i think it is counterproductive to increase rates at any level, and certainly on the high end. if you raise rates on people, they will avoid taxation and move their money abroad and invest less. many high-income people or small business owners, if you increase their tax rates, they have less incentive to invest. you get into this negative cycle if you start to increase tax rates too much. host: pam is on our line for republicans out of oklahoma caller: good morning. i think we need to do away with

the department of education. the latest teddy's -- the latest studies about nations around the world and how their students are doing, american students are not even in the top 10% of anything. that tells me the department of education is failing miserably and needs to be returned to the states, counties, and communities where the kids are going to school. let them decide how their students are going to learn. i think the department of transportation also needs to be done away with. it was greeted to wean us away from dependence on foreign countries. it has not done it. host: we touch briefly on the department of education. what are your thoughts about her comment? guest: i agree entirely.

there are a lot of activities in the department of education that could be moved to the private sector. a number of countries have privatized and their passenger rail system. we could do that, too. but. passengermany railroads in the united states that only exist because certain members of congress want the trains to go through their districts. i think if you privatize amtrak it would work very well. i will give you another example of transportation spending we could do away with. we spend $10 billion a year for local bus services and light rail services across the country. that makes no sense to me. in the big cities -- if they

want bus services, they should fund those systems themselves or move them to the private sector. host: last sunday, the washington post wrote about five and myths of federal workers -- wrote about five minutes of the federal workers. -- wrote about five minutes of federal workers. -- wrote about five myths of federal workers. your thoughts about that and whether or not reducing the number of federal workers and their pay would go to bringing down the deficit and reducing the federal budget? guest: federal pay has grown explosively over the last

decade under president bush in particular. for example, average federal worker pay has gone up 60% since the year 2000. the fellows that have a column in the washington post last weekend -- that is completely wrong. there has been a number of studies that have compared job to job the pay of federal workers. on top of that, they get extraordinarily generous benefits. federal workers get a 401k-style retirement plan. on top of that, they get an old- fashioned defined benefit pension plan. they get two different pension plans. that is the type of thing you do not see in the private sector. it is on fair to ask taxpayers to pay for these benefits.

host: good morning, nick. caller: good morning. thank you for c-span. i am a bit frustrated about the gentleman from the cato institute. we need a lot more debate about issues like this obviously. it is all about what the role of the government should be in this society. all the discussion about deficit spending compared to tax revenue is really just a pretext for discussing what the role of government should be. this gentleman is committed to the ideas that government needs to do as little as possible. he is ideologically committed to the idea that the private sector always does something better than the government does. i don't think that is evidence- based, and that think you need to have a two-way discussion

here and in other places, situation for situation, about what works and what does not work. the idea that you leave government education loans to the private sector, that you automatically have a better outcome for students, i think that is laughable. host: we will leave it there. guest: if you go to our website, it is very much evidence-based. i have spent many hours studying these federal programs. the army corps of engineers, we spend about $8 billion to subsidize water systems around the country. the army corps of engineers has never worked very well. there has always been complaints that it is a poor federal bracket. a lot of their projects damage the environment. the army corps of engineers did a horrible job with the levee

system in new orleans. they made a lot of other mistakes leading up to hurricane katrina in 2005. a lot of these federal agencies have not worked well for many decades. we go to the evidence in detail on the web site. similarly, arms subsidies started under president hoover have never worked well. the giant deficits we have these days are a good opportunity to start going through the budget in great detail and find these programs that have never worked properly and cutting them. host: our last call comes from jacksonville, florida. frank is on our line for democrats. caller: i wanted to say something about this chris edwards and the cato institute and how they want to hand the country over to private tears. these are the people who have

the trojans of dollars -- with the trillions of dollars. these are the ones that are holding the people of the country hostage until they continue to get their money. host: we are going to leave it there. we are running out of time. chris edwards, you get the last word. guest: the federal government has been bigger than it has been in peace time. i think it damages society frankly. the bigger the federal government gets, the less freedom we have in america. it is not just about economics. the more federal regulation we have in education, the less freedom schools have to plot their own course and to innovate and to experiment. i think the federal government is a threat to the economy,

civil liberties, and for those reasons i think we need to downsize it. host: thank you for being on the "washington journal." we are going to take a short break. first, a look at this week's news is through the eyes of political cartoonists.

>> "washington journal" continues. host: mitch caesar is an executive board member and is here to talk to us about the future of the democratic party. give us your thoughts about the future of the democratic party,

starting with the 2010 midterm elections and going forward. guest: i think the future is fine. there are a lot of swing cycles we have had. think is so much of a plus for the republicans or eight-for the democrats. everybody is angry at everybody. host: sting has a popular song called "why should i cry for you?" guest: there are a lot of people out of work. there is a tremendous fight over unemployment and the extension of benefits. that fight continues, obviously.

i think we are calling it a way out of it. it is going to take a long time. it is a world of global market issue, but we are going in the right direction. host: what does it say about the future of the party and democratic leadership, especially coming from the white house, that former president clinton was in all of the major headlines this morning regarding his appearance at the white house about his meeting with president obama and the things he had to say about principle compromise with republicans? guest: i do not remember which paper it was this morning that called president clinton the explainer in chief. he said that he has never seen a non-partisan bill not upset

partisans, which i think is true. i think he also said that he wanted to thank president obama for bringing him into the pressroom and letting him speak and leaving. host: we are talking about the future of the democratic party. we like to get everyone involved, democrats and republicans. also, send us the mails and twitter messages. i want to draw your attention to a headline in this morning's miami herald.

i believe there was a net loss of four house seats from florida. is this an indication of the direction of the democratic party particularly in congress? guest: i do not think so. these were swing districts, districts that one in 2006 or in 2008. therefore, they go back and forth. florida passed amendments a five and six, which lessens the power of the florida legislature to create seats. they do not have total control. that was a great victory for florida democrats. you need to receive more than 60% of the vote. that was achieved. host: our first call comes from massachusetts.

sandy is on fort democrats. go ahead. caller: i think it is unconscionable that we would be considering giving tax cuts or extending them to millionaires and billionaires. we have rising child poverty in our country. at the last time the democrats made these big deals with republicans with mr. clinton, the result was we ended up with families, women and children, living on the streets and homeless. it is time for us to take the moral high ground and say when the general public is suffering to the extent that it is, we are not giving tax breaks to millionaires. the cost of oil has dropped. i see that at the gas -- i do not see that at the gas station.

i am still paying $3 a gallon. why is that? host: would you ever switched over and become a republican in 2012? caller: in would make me an independent. some are not willing to budge on common sense. guest: i think it is difficult. the president has spoken about he does not want to go into january 1 and have a situation where the average middle-class family has to pay $3,000 a year more in taxes. on the other side, house democrats are very upset. this is the lame-duck session. over 60 house members will not be back after january 1. they are especially angry because they will be gone.

what the concern is, obviously, is that will a deal after january 1 it be worse because it john boehner's gang comes in? there are parts of this bill that i do not like, and implement extensions and other things those were critical for our survival. host: jim is on a line for republicans. caller: how are you doing? i have voted republican and democrat. i have voted republican for most of my years, but it looks like right now we have a republican president. we could not have a better president right now. we protected the rich and we got everything we wanted.

guest: a lot of democrats have said -- a quick analogy that was referenced in an article the other day. they talked about what life would of been like without george before deciding whether he was going to throw himself off the bridge. what if the democrats were on the bridge and instead we live in the world with republicans in control and what kind of situation we would be in. obviously, a lot worse. host: next up, indiana, john is on our line for independents. caller: thank you for taking my call. i would like to point out that president obama is a more

[unintelligible] person than most people think. when he said we were going to end combat in iraq, i thought he was either the smartest guy or the dumbest guy in the room. i knew a couple of months ago that most people should have realized they were going to get the two-year extension of the bush era tax credits. that was never something that was going to be taken off the table. i appreciate you for being here. how will the democrats go forward in terms of being able to change the tax law to take the arguments out of the republicans throats, saying that increasing taxes for the upper 2% are going to curb the economy because small businesses are going to go down? if we could create the small business tax bracket enforce those people to file under the

small business tax bracket instead of individual filings, then there would be no problem with increasing taxes on the upper class is of our economy. thank you very much. guest: republicans do not say this in earnest, overhauling the tax code. we probably talked about that as long as this country has been a nation, over 200 years. specifically when the president talks about a 2% rollback in payroll taxes and so forth, obviously not onerous to democrats, obviously as you reflected, the upper income folks who are getting off or the estate tax, i think that is going to be a pivotal point. i think the tax code is a mass, and frankly, you could have

every cpa in the world get involved and nobody understand it. that calls for an overhaul in itself. host: on our line for the democrats. go ahead. fort lauderdale, where you hear? caller: thank you. i think the problem is not a republican, democrat, or independent thing. i think our country is being held hostage by the media and by money. wind the lady out those california spend $140 million not to get elected, that is what is killing our democracy. i must tell you that the stuff that comes out, that the democrats were able to push through, they were not able to get the word out because fox news is running this country.

how can we get anything to get there today? the last time this country was united was world war ii. i am afraid that we are going to be going to an economic war between the haves and the have- nots. guest: part of the problem is the immediate issue. money has increased the toxicity of this discussion. the recent supreme court decision, opening up the floodgates right before the election to allow unlimited expenditures for certain groups, collecting money, no reported of our requirements. this created the environment to make things even worse. on a broader perspective, the problem is that republicans unfortunately for democrats and the before the country are really worried about

synthesizing their bumper stickers. democrats make a four-page to college essay about it. because of that, frankly we are not getting out the message. we have not been able to clearly define what we are. we have allowed the opposition to do it. we need to get out there and tell our story better. president obama and former president clinton are good explainers. some on the far right may not like it, but there has been serious pieces of legislation. host: from this article --

-- goes on to say your thoughts? guest: i am shocked that you cannot take the policies of the politics, whether you are a columnist or a politician in this nation. it is like any bill i remember. i was with the president the other night in a few months ago. i said to him you are being attacked by the left and right. usually, that means you are on the right track. we had a light chuckle.

he said i really believe so. no matter who you are, being the president of the united states is the toughest job in the world. i think they realize it now. i think it is interesting, bringing back bill clinton yesterday -- they said that was scheduled and long time in advance. it showed, i think, between both the democratic presidents, where democrats are. i think it had a good soothing effect, politically. host: did you think he was doing a good job because everybody hated him? guest: i do not repeat conversations with the president in this bill as a matter of policy, but i do believe the president was confident. i did not find him apologetic in

any way. i think he thinks he is doing the right thing. it is interesting that many pundits call this a stimulus bill. i have always found the president to be very smart and have a great sense of humor. i think in these times, both of those elements are critical. host: mitch caesar is here talking to us about the future of the democratic party for another 20 minutes or so. our next call comes from west virginia. call is on our line for republicans. caller: the democrats chose nancy pelosi as their leader in the house of representatives. i think it diminished their future. as long as you have people like nancy pelosi, barbara boxer, harry reid trying to lead the party, you do not have much of the future.

all you have to do is look at the state of california and what the democratic party did to the state. also, in west virginia. look where we are. host: before we get a response, who would you like to see the democrats have as their leader? who do you think the republicans can work well with? caller: they should have chosen -- host: he is a senator. nancy pelosi is in the house of representatives. caller: i think california messed up. host: we will leave it there. guest: i have a lot of friends in west virginia, and i discussed this with them.

what i thought interesting was a joke mansion who was an extremely popular governor who ran for senate. he was basically trailing until the very end. he won because he did some pro- don commercials and so forth. -- some pro-gun commercials and so forth. as we try to find common ground within the party, those of philosophical differences, we have to try to do that more broadly nancy pelosi was an easy target. she is from california, from the san francisco. she is a woman. that makes her a target. if she was a guy from north dakota, i do not know if it would be such of the problem.

that it back to republicans are not that opened about what their plans are. host: i am being told that the person that our last caller was referring to was a petition from tennessee. guest: slightly different from chuck schumer. host: as one of the young democrats in the house, what kind of leadership you expect to see from folks like chuck schumer? guest: i think the country is looking for compromises to some extent, obviously. i think -- half of the blue dogs which are conservative democrats lost in this last cycle. therefore, i think there hand

will be strengthened and little bit because if they will help us get back the majority. i think he would have a bright future. my owned -- my own a congressperson in south florida will also continue to have a very strong voice. host: glen, welcome to the "washington journal." caller: i am wondering if this dream act has not already taken place because there are so many children going to school that are illegal immigrants, and so many children in hospitals that are illegal immigrants. what kind of programs to they ?ave a question mar what do the democrats think

about this? what is going on it? guest: i do not think it is about votes. i am being somewhat more of a politician, so i apologize. i think people from our side of the aisle are looking for equity and fairness. the kids are not the perpetrators. they are the victim. i think they want to get done with this tax bill because we need to clear the political debris. if we are going to get to the start treaty on nuclear arms and issues like don't ask don't tell and get it done before the first of the year. we need to clear this type of matter, the tax code and the extension of the unemployment benefits, out of the way because the window is closing. time might be our biggest enemy.

host: our guest this week on " newsmakers" is senator charles levin. we talk to him about a number of things, including his thoughts on the tax deal that was reached this week and what the democrats are saying and what democratic party officials like yourself are saying, what the best deal the president could agree on. this is what he had to say. >> i am not satisfied with the presidential push. i believe he should use the bully pulpit to say something like this on taxes. this is the thing i believe in. it goes through the list of things he believes in. i don't believe tax cuts for upper bracket people or for the rich -- i am going to fight those. the way i think the president

needs to fight them is to say that he is going to use all of the power he has from a bully pulpit and to urge the senate to stay in, right up to the new year's, and if the republicans at the end of december 1 to continue to filibuster a tax bill, which is aimed at helping middle income people instead of upper income people, that is something they will have to take on their own heads. that is the problem. i don't see that kind of a willingness to fight that hard, where he will take that kind of position. that is what is necessary. host: mitch caesar, executive board member with the committee. what are your thoughts? guest: i think he has been around a long time and is a very intelligent guy.

he comes from the midwest. there is a lot of common sense there. i think he is basically poising a level of frustration of democrats in general. this public has a very short fuse, whether it is about republicans or democrats. i think it will come down to whoever has tried to really get results. whoever has -- whoever is perceived as faking it, i think will suffer in the polls. host: what will it mean in your opinion for the 112th congress as they move forward? what are your thoughts about the effects of the two-party? guest: i think that the party had both positive and negative results nationwide. some of the tea party folks in

nevada and delaware and so forth were really, really out there. they were like sarah palin clones. they looked like her and talked like her. in florida, specifically, i think they have had some impact. i don't know if i agree with anything they say philosophically, but i would have to say they have certainly had some positive impact on the republican party. host: next up is illinois, on the line for democrats. caller: hello. as i watch this, all of these discussions going on and on and on forever, i think you can sit

there and discuss this stuff forever, but the problem in this country is exemplary of the man that you had on their before and the way that he heartlessly sat there and talked about what he is going to do to the people in this country and tell the greedy people in this country, start to have a heart and have some patriotism and care about the quality of life in this country. you guys can talk forever. just the way he talked about those government jobs and how they make too much money. every time they see somebody in this country who has a decent paying job, they want to get rid of it. host: we are going to leave it there. our last segment dealt with spending cuts, reducing the

federal budget. what are your thoughts to bring the size of the government down to a manageable size? guest: i want to thank you for having me follow a tax cut experts. i think the caller is right. i think there is some heartlessness in that critica. politics has been a dirty word in the past. it has gotten much worse. i think we need to balance the interests. i think when we look at tax code, we have to weigh them against the value of life. there has to be a middle somewhere so people to not have to fear losing social security. we need to protect our children and grandchildren. there needs to be a

host: next up are line for republicans out of the georgia. welcome to "washington journal." are you there? to "in salt lake city, utah. caller: thank you for having me. a quick question regarding the presidential election in two years from now. that is a quick -- a quite a bit of time. id'd might be unwise to put too much stock in the poll results. a lot can change in that time. it is remarkable that yet another public opinion has it shown tremendous dissatisfaction among democrats with the prospect of president obama being the next democratic candidate in 2012. not only do republicans disagree the direction the president is taking but many

democrats may also prefer a different candidate two years from now. i was wondering what you felt about that. guest: i agree with the caller that we have become a country of instant gratification, the latest poll results, even though it is so far out. there has been discussion over whether president obama will get a challenge within the democratic party for a primary. i know in the last couple of days i have read that howard dean has taken himself out. russ feingold has taken himself out. every relative of huffington has taken them down. i do not think that will really materialize. people are upset with in the party, but i think we do ourselves are no honor by worrying about this type of thing two years in advance. two years in politics, especially these days, is a lifetime.

host: two years is a lifetime. but in the last cycle, we have seen where candidates for president get their start usually about two years out with trips to iowa, ohio, florida. what is it that you think will prevent or how does the president prevent some sort of insurgency, if that is the right word, for me there someone on the left or in the senate who thinks they can do a better job and be a better representative of the democratic party? guest: than two years in advance scenario is correct when there is no incumbent president that you're going to challenge. when you're going to do that, you need to start out early which we have not seen yet. although the last cycle ended literally just a few weeks ago. the last time a starkly this happened was in 1980 when president carter was being

challenged by ted kennedy. although the fervor was very great for kennedy, i think the incumbency of the president, at least historically, was up to much for him to overcome. i do not think that has changed very much even though we live in a more fluid environment. the rules of 30 years ago, let alone 10, have changed. that is one way president obama's succeeded in the first cycle. he saw the change in the environment and captured it before the other candidates did. host: on our line for democrats from new york, new york on the line with mitch ceasar, board member for the democratic national committee. caller: good morning. i have three questions i hope you can speak on. the first is why are all of these issues handled at the very last minute? second, why you think president obama spoke not to mention the

99 years in his attacks speeches when there are clearly one in two million unemployed individuals? do you think the democrats will add 99ers to the unemployment package? guest: why did things happened in the last minute? this is washington. i sought a teacher the other day that said, "never underestimate the stupidity of large groups that congregate in washington." i think the reasons things happen last minute is the longer you have an issue floating out there is the lottery can become a target. washington is great at that. i am really not an expert, but i have to say that in listening to discussion whether by senator levinson for your previous guest or the cato institute on tax

issues, i usually go to sleep. i think most americans usually do. and is not an interesting, sexy topic. i do not want to know or gas. that would do a disservice to the question. there is so much to do. with a few weeks left, there is so little time. if we think negotiations are bad now, wait after january 1st. host: we have this e-mail out of illinois. they ride, "president obama is agreement with the republicans was masterful.

guest: that sounds like it was written by bill clinton. i alluded a moment ago that after this issue came up and did the democrats in the house who represent a lot of districts reflect their comments with, "with all due respect." someone making $1 million does not deserve a break, but you have to take the good with the bad. there is a very conservative columnist who wrote about the stimulus package and on "hardball" chris matthews last night talked about how he thought the deal was a fair one. it is interesting literally in a day or two at least how public sentiment starts to shift. will this affect members of the

house with the one-two paunch added? there's pressure for everyone to get a deal done. host: out of memphis, tenn., on our line for republicans. caller: republicans, democrats, and independents will all have to sacrifice usually in the next couple of years. if we do not, this country will be broke, not just from balancing the budget for reducing the deficit. also, when you have politicians like dick durbin supporting the that commission, there are some really scary things that will come down the pipeline here. thank you. i appreciated. host: are you still there? when you say you have senators like dick durbin and who -- guest: tom coburn.

host: why you find that scary? caller: look in their eyes. they are scared of what is coming down the pipeline. host: how you feel about the that commission? are you scared? guest: and they are taking very tough stance. when you have a call then you have to take medicine, it tastes awful. some of them are unencumbered by political office. some of them still serve. am i happy with a lot of it? no. do i think some of it has good marriage? yes. host: with apologies to "america offense," is there a spoonful of sugar to help this medicine go down? -- apologies to "mary poppins." guest: we will see how one goes down. the estate tax or maybe the point they will fight about.

that may be the "spoonful of sugar" depending on your point of view. host: next up is grand lake, mich., on our line for democrats. you are on the "washington journal." go ahead. caller: thank you for c-span. i think the tax breaks should expire for everyone. the country is in a time of war and why not let the tax rate expire for the rich and the middle class tax it shows that the country is sacrificing to get us out of debt and paid for the word that was never paid for. -- pay for the war that was never paid for. what does the democratic party to do to get their point across? they have done more in two years than any president has getting the health bill passed. he has done a lot of good things. how do we get our message across? how do we stop the republicans? i give the republican party

credit because they get their message out. they said they were not going to let this president succeed and they have done everything they could to stop it. host: we will leave it there. mitch ceasar? guest: we do the republican party as the party of no. what troubles a lot of people is we do a lot of things where rick ko'd, give tax breaks, and it has to come from the other side. we have a household budget at home, and it will have less coming in we have to spend less. as we have talked about, democrats need to get better and shorter messages. we saw an interesting positive dichotomy yesterday at the white house press briefings with two democratic presidents, president clinton and obama, basically having the confidence, frankly, to share the stage with president clinton who at one

point asked ever want to lock the doors so they could not get out because he was going to spend some time. we need to do much better with their message. republicans agree, and i have always agree that republicans are pretty good at winning elections and democrats are good and governing. some on the party line may disagree with that. "the newe front page of a york post." in order to be successful, does the current president have to go back to the future with the >> president? -- the ex-president? guest: president clinton was one of the most popular speakers in this last election cycle. part of that it is because he is bill clinton and the other is because he is a great speaker.

he does not have challenges of the dirty work triangulation. host: our last call comes from carson city, nev., on our line for republicans. go ahead, bob. caller: c-span has done a great job over the years. i found out for c-span that everything in this country is a direct result of everything congress has legislated including the loss of millions of jobs through nafta and cafta. congress is getting a percentage of every drop shipped overseas so they really do not want to put the message out there that nafta and all of these other trade deals are directly shipping jobs overseas. corporate america controls everything. thank you to c-span. you are doing a great job. host: mitch ceasar?

guest: i want to thank michael for calling in. overseas jobs is one of the greatest problems we have with corporations sitting on the $2 trillion in cash. we want to boost up the unemployment -- the lanha -- the employment rate. we need corporations to let loose some of that money. the stock market is up, thankfully, and we are hopeful that once we get through some of the details of these bills that drop rates -- job rates will improve. host: on the front page of "the wall street journal" this morning, they talk about demand for american soybeans, cars, the selections, and even art work.

is there any way that the democrats will be able to take some credit for this and help improve the position as they move forward? guest: we have not been very successful taking credit for any of the things we have done in the past two years. hopefully we will get better for that because things are up on -- are on the upturn. palin will attack us because they did not go up high enough. that is why the american public is so frustrated. host: mitch ceasar, thank you for being on the "washington dermot" this morning. a discussion on federal tax preparation. make sure to get out a piece of paper because we will have lots of information for you regarding the upcoming tax season and your federal tax preparation. you are watching "washington journal. today is saturday, general -- december 11th.

>> fourth amendment rights and illegal search and seizure today on c-span radio's landmark supreme court cases. >> although they claim there was a search warrant, there was no evidence of any magistrate that had been asked for a search warrant. there was no record of a search warrant. >> listen to the argument on c- span radio. in washington, d.c., on 90.1, fax them 132 -- xm 132. >> as the worker in your documentary for the studentcam competition, here are a few tips from our judges. >> i look for you, the student.

i want to see you and your personality which helps make your the a standout. >> what i like to see most in the entries are a real investment and care in the topic will be telling us about. be sure to be interested in what you were telling us. if you are not interested in what you are presenting, chances are we will not be. >> 1 tie-breaker for me was the requirement on using c-span video. i look for videos where people have looked at the c-span content and have said, "what elements of disease. video make the most sense for telling the compelling story i am trying to tell"? >> for all the information, log onto studentcam.org. host: kevin mccormally is the editor of the "kiplinger's personal finance." their annual forecast issue on

where to invest in the 2011 is out now. today we talk about a year and tax advice for 2010. first, with the discussion regarding tax reform, where do we stand right now and how will this affect the average american as they get ready for april 15th? guest: people are still on tenterhooks about what these people will do. year-end planning has been held hostage. we do not know what the tax rules are for 2010 alone for 2011. there are all these things that expire every year because congress cannot bring themselves to pay for them more than one year at a time. they proved extension, it expires, day approve an extension retroactively. we have uncertainty. people can start their year-end planning now. here is one example for investors. as the law stands right now, the tax rate on long-term capital gains, stocks, bonds, or other assets you all for one year is

15%. if nothing happens, that goes up to 20%. that is a 33% increase in the tax rate. someone is thinking about selling the stock, should they sell at the end of the year, wait until january? what will happen? i did they will restore the 15% rate, so people can make those decisions right now. your-and tax planning is always a decision looking and two years. you want to figure out how to pay the lowest amount of tax in the combined years. you may want to accelerate cement, to get into a lower tax bracket or accelerate exemptions. in the next few days, hopefully we will know. host: there are a lot of americans planning on a two- track based on the things you have said. there may be some americans that, by themselves, have to file twice. why would that be necessary? guest: they would not have to

file twice. right now, people are just trying to determine what to do so they are in the best position when they file next year. i do not think we will see filing twice even if congress fails to act if they hit gridlock. at the bush tax cuts do expire and everyone has taxes go up, focus on the bush tax cuts and they think we are fighting over the top earners. the fact that the matter is the bush tax cuts expire and every american's taxes will go up by $800 when the 10% bracket this appears. there you have to look at that. right now, we are trying to figure out how to be in the best position when you figure those positions for 2010. host: there are those people who have all of their ducks in a row and when the forms come in, they are ready to fill in the numbers, it off, and get it out. guest: this year, the irs did

something very interesting. they started printing the forms not knowing. there are places on the forms for these extenders, like the $250 extensions for teachers. it expires every year and they reinstated. right now is dead. the irs concluded that line with a little note that says, "be careful." of the irs is trying to be on track. in the past because congress rates so long -- wait so long, a lot of people want to file right away. 75% of the american people that the government takes too much out of their paychecks, but they do that to get the refund. that is why they want to file early. at kiplinger.com we let you know how to do your withholding properly. it will help you save money all year long. host: we are talking about here-

and tax advice with kevin mccormally. if you want to get involved in the conversation, we have divided the numbers differently. if you are in the eastern and central time zones 202-737-0001 and 202-737-0002 if you are in the mountain and pacific time zones and you can also send us messages 3 e-mail and twitter. our first call comes from the republican line in gainesville, texas. jim, go ahead. caller: i think there is another tax option which would be to end the prohibition on drugs and tax of those. we tax cigarettes and liquor. i do not see why we cannot do that. one of your previous guests was talking about swinging back and

forth with republicans and democrats. america is fiscally conservative and socially liberal. as soon as the party's figure that out, we will be a lot better off. host: we will leave it there. the idea that congress will allow taxes on illicit drugs? guest: i do not think so since we do not allow people to purchase them. i do not think it will happen. host: los angeles. go ahead. caller: i have a specific question. when my mother died three years ago, she left me a small amount of savings bonds, $5,000 or so, that she purchased in the both of our names 20 years ago. if i catch them in, do i have to pay taxes on the interest? guest: probably. the only exemption if you would have paid taxes every year.

since you are a co-owner, one thing about savings bonds is that they are not like most other assets. when there is an estate tax, any earnings up until the time of death of the first honor, there is no taxes. this is considered income in respect of the deceased so you will be taxed on the full amount of earnings. host: we can talk about that now. in "the new york times" this morning, there is a headline about the estate tax cut off.

explain that to us a little bit. what do they mean by "super- rich"? guest: this was created in 1916. we have had taxes on estates. it expired at the end of 2009. no one thought it would never happen. it was part of the first bush tax cuts. it disappeared and it was supposed to come back to life in 2011. what president obama and the republicans agreed was to bring the tax back to life at the exemption level -- i am sorry. in 2009, the first $3.50 million was a tax-free. tax returns filed in that year, 15,000 estates' pay the estate tax. 2.5 million people died and

15,000 of them had enough money to have to pay an estate tax. in 2008, the exemption was $2.50 million and it rose to $3.50 million. the tax will come back with a one man and dollar exemption. it is still high enough that the vast majority of americans will never pay it. obama has made a deal with the republicans comes back and it will rise to a $5 million exemption or $10 million for married couples. sanders said it during his filibuster that it would apply to 6600 people. the interesting thing about the estate tax is that congress will probably reinstated retroactively to january 1st, a 2010, but the estates of people who died this year, they would give them a choice not to pay it. instead of paying the tax based on a $5 million exemption, we will say if you like the other law with no state tax on a

carryover basis of the people who inherit property, like the last caller, any appreciation up to the date of death, there are no taxes. that is called a step-up basis which is figured on the date of death about the. this is a carry-over bases. if you inherit stock, you have to know what they paid for it and you pay tax. when they will allow states to do this year is to make a deal. which one works better? no estate tax and a carry-over or the $5 million exemption? the vast majority of people will take the $5 million. host: year-and tax advice is what we're talking about this morning on "washington journal. we have kevin mccormally the editor of "kiplinger's personal finance." caller: i just wanted to ask. i was incarcerated for 18

months. when i got out, the irs sent me tax forms saying that i owed them money. i did not understand why i needed to pay taxes if i was in jail. guest: if you had earnings, they want to tax them. caller: how do i have earnings if i was incarcerated? guest: they could have gotten a report that you receive day -- a 1099 form. send them a letter. the irs makes mistakes. someone may have used your social security number and there were earnings reported. there are all sorts of ways this could have happened. if you can prove you have no earnings, they will leave you alone. they have other fish to fry. host: did you have a prison job when you were behind bars? caller: no. i was just locked up awaiting trial. guest: if you had in our

earnings, you know -- owe no income tax. coliseum number on the top of the former. -- call the number. host: now those who do have prison jobs, would they be subject to taxes? guest: i do not know. the wages are low enough, that i doubt there would be taxes. if they are married and have spouses on the outside, there is no exemption for that. host: dubuque, iowa. caller: i think the taxes should go back prior to reaganomics and this trickle-down theory. go ahead and tax the rich at

what they were used to during the trickle-down reaganomics. the people who let the wealth trickled down the road. guest: the deficit commission reported that it went exactly the opposite way. they brought was eliminating all tax deductions and tax credits and reducing the rate so it would be 23% and not 35%. the debt commission is going in the opposite direction that this gentleman suggests. they want a much simpler tax code. this is what president obama suggested early this week that he may start pushing for. we think something big will happen within a few years simply because as the deficit commission said, we have to do something. things are out of control. host: from virginia, go ahead. caller: it is time to pull up

the bootstraps. that the rich people to pay it off in full. get wall street to pay it off. the people who take the jobs overseas like maytag, they should be taxed half of what they make. but they did not like it, they can go to mexico or whenever. pay off the deficit and then it take the money that the rich are making, the dollar is so strong that they will get it back in no time. guest: it sounds like he is talking about tax incentives for companies that want to keep jobs here in the united states or tax incentives to keep jobs here. host: what i was wondering is, are there tax incentives for consumers to buy things that are produced here in the united states? guest: i do not think there are

any restrictions to buy domestically produced products. when we had cash for clunkers, there was concerned that it could apply to buying a japanese car, a german car. i did not think congress has focused on were the goods are produced. there are incentives to buy things. we still have an energy credit that you can get a tax credit of the $1,500 if you insulate your home or put in the new windows or doors. that expires on december 31st. if you have been thinking about doing it for your-head tax planning, you should try to get biggest -- to get those paid for and installed. high efficiency furnace, air- conditioner, they will be the $1,500 to help pay for it. we have seen in the proposal they are discussing now that it will not be restored in 2011. there are some incentives for that. the bill they are working on now has incredible incentives for businesses. is the 100% bonus depreciation.

if it goes through, any company in this country, anything they buy with a useful life of less than 20 years, machinery, equipment, they can deduct the full amount the year they put it in service rather than depreciating over five, 10, 20 years. a huge incentive for businesses to buy better equipment, create more jobs in the stimulus program. host: our next caller from sacramento. you are on the "washington journal" with kevin mccormally of "kiplinger's personal finance." caller: thank you for being on the show today. my question is this. we have a family trust and it is worth about $1.4 million. it is all derive from certificates of deposit. my father has already paid taxes on all of the income from that.

we have three children in the family. if the exemption goes back to $1 million, would that count on this type of income tax? guest: not on the and come, but the asset. do not worry. it will not go back to $1 million. believe me. the republican controlled house that comes back in january will reinstate some sort of estate tax exemption of probably at least $5 million. that is why people think the democrats are not over this. obama got the best deal he could get. if he did not take this now to get the unemployment exemption, something even more generous would come through next year. do not worry about that with your $1 million trust. host: next up is madison,

wisconsin. caller: could you please give us some accurate figures on what percent of federal income tax revenues come from the top 5% of households and what come from the bottom thick the% of its households? -- the bottom 50% of households. guest: we have a calculator on our website, kiplinger.com, a calculator. if you type in "tax burden" you get a calculator and it will tell you what percentage of people fall in that income level and what percentage of the taxes they pay. that is based on data the irs released a few months ago. it is up to date. it is remarkable what you will see how small a percentage of the total federal tax burden is borne are the lowest 50% people.

i think it is something like 20% paid by the top earners. millions and millions of american families pay nothing in federal income taxes. millions of the families get the current income tax credit which is a refund of the social security taxes they paid because they do not pay enough in income taxes to get a big enough refund. look at the numbers. in a show you why it is really difficult to balance the budget just with higher tax rates. take a look at it. i do not keep the most up-to- date figures in my head. host: in one of the most recent kiplinger tax letters comes out by weekly. i atomizers can easily shift deductions, state, and local income taxes. mailing your january estimate in late december like to claim the deduction this year. explain that. guest: this has been held

hostage by the uncertainty. if you have state income taxes that you pay quarterly and it is not withheld from your tracks -- checks, your last payment is due january 15th. if you write that check and put it in the mail december 31st, you can deduct it 2010 which gives you the tax benefit one year earlier than if you write the check two weeks later. the same thing as a charitable contributions. if you are thinking about making one this year, a charitable contribution made by december 31st gets to deduct it this year. on january 2nd, it is in 2011. state income taxes, if you have a property tax bill did in january, you can pay an early and get the tax benefit a full year earlier. the season for giving. louisiana. go ahead. caller: about the itemizing and a different deductions out

there, can you expand on the opportunity of looking at a flat tax where everyone regardless of income, you just pay a flat tax. would that be more equitable for all americans? thank you. guest: it is a question that comes up a lot. the problem with the flat tax is how high the rate would have to be to replace the income that now comes from the income tax. some people say 27% of their income would have to go. it is tough. some people say 15% and it is arguable. the whole idea with the deductions and the credits, these men and women keep trying to make it fair. they did not put the brakes in the largest on a whim or to help a friend. what the debt commission wants to do is get rid of all deductions. they are moving toward a flat tax. they still want to have a progressive with 8%, 14%, and a 22%.

they are trying to move in that direction by getting rid of it. if the debt commission had their way, there would be no itemized deductions. it would all be standardized. it would simplify life. it would put tax planners out of business. there is a movement. whenever we get to a pier flat tax -- how would do you deal with a really low people or the low and middle class? do they pay the taxes? will there be breaks? host: tampa, fla., you are on the "washington journal" with kevin mccormally. caller: thank you for taking my call. it never ceases to amaze me. i am poor. it never ceases to amaze me. the rich people pay taxes. i love to see corporations grow and grow. we need those people to have more money so they create more

jobs. when you on a corporation, you prosper. i could prosper all of my life before. the rich people do a lot of good when they start corporations and we can work. i think that it is an important thing. guest: we are seeing these incentives for corporations to buy new equipment. it's the corporate rate is 35%, they spend $1 million on new equipment and it saves them taxes. that is the kind of incentive they're trying to give to corporations is so, as you say, they can create more jobs. it is a snowball effect. one reason why we are in such a terrible deficit problem, figures came out in the first two months of fiscal year 2011 that the government spent about $600 billion and they took in $300 billion in taxes. for every $1 that washington's stance, taxpayers only paid 50

cents. part of the problem here is high unemployment means people are on working, not making money, not pay in taxes. host: we want to show you some of the average savings for 2011 based on the current tax deal. this comes to us from the tribune newspapers. this goes all the way down to somewhere between $40,000 and $50,000 will save around $1,700. what are your thoughts on the likelihood that this tax cut deal will save -- stay the way it is?

guest: great question. the funniest thing about this tax cut debate is the argument that the republicans want to make the bush tax cut permanent and the democrats do not want them. nothing they do is permanent. they change it every year. they can do whatever they want. it amazes me. will this go through? i think it will go for two years. i believe this two years that congress and president will get serious about significant tax reform. i liked what the deficit commission has suggested. there will be big changes. it keeps me in business and i am happy about that. those figures, you know, we can waive them around, but as the gentleman asked earlier about the percentage of taxes that people pay, the fact of the matter is that any tax cut you give, the rich people will get more dollars because they pay more. just try to keep this in

perspective. should the top rate be 35% or 39.6%? that is a battle we have. i do not know how much difference that really makes the people. the argument that it is a job- killing tax increase that the bush tax cuts for the wealth they go to small businesses. not that many small business owners make $250,000 per year. now i will hear from the republicans. these numbers are accurate. if you go to the calculator i mentioned on the kiplinger.com it shows this. host: we are looking at more of the numbers and the average savings for 2011. let's take a call from oregon. go ahead. you are on the "washington

journal." caller: thank you for taking my call. i am calling because when all of this started, i googled want the largest a marginal u.s. income tax had been. in the 1940's and 1950's when everybody seems to think we have a nostalgic for that time, the higher tax rate was in the 80% and 90%. john kennedy in 1964 moved it down to 70%. it then limped along and then reagan dropped to 28%. it seemed like the money was pulled out of social security. there was not enough in the general funds, said it pulled that out of general -- of social security. what has changed and that makes this a better way of doing

business for the country? guest: ronald reagan became a republican because of the high marginal tax rate. he said it was crazy. it is a discussion that we have about having a lot of tax rates in the law or your tax breaks with a lower rate. that is what they try to figure out. that is the entire battle. should the -- there is an argument that the top tax rate is 90%. it is a disincentive to do additional work. if the government will get 90% of that extra $1, why go to work? first of all, it was investment income that would be taxed at 90%. earned income from a job has never been over 50%. it is a major debate we keep having in this country. i have to disagree with you on social security. i did not believe funds were ever taken out of social security to cover the deficit. unless you are suggesting it has trillions of dollars and that is

borrowed money. but honest people look at the trust fund money being used to finance the government and knows it is additional debt. a trust fund money is there. i do not believe they ever pulled money and social security benefits we keep getting higher and higher. host: what is the status of the alternative minimum tax? for people who may have to pay the amt, what do they have to look for? guest: it is the tax that everyone hates. last year, 15,000 people paid it. if congress does not act, 25 million people will pay it. it takes away deductions they do not get exemptions for your kids, no state income tax break. you have a higher income level to tax, a lower rate than the individual and -- income. everyone hates the tax. it started in 1959 after

congress discovered that 155 rich people that made more than $200,000, 150 people paid a net income taxes so they created this parallel tax system to make sure they paid something. they did not indexed for inflation so each year more and more people get caught up. there is a huge standard deduction. each year it expires it goes back to a lower amount and half to patch it up and by increasing the standard deduction. this bill will do it for two more years. about 50,000 people will know it. host: beach haven, new jersey. caller: good morning, mr. mccormally. i have a question with regards to a great deal of advertising that i see and hear on the radio, television, and in print

with regards to tax advocacy people in, tax masters who proport to be past irs agents who will save a great deal of money on taxes which you owe for back taxes. guest: great question. we have done a little bit about this at the magazine. i am very skeptical. these people say i have a client that those $3 million and we settled for 12 cents. there are compromises that the irs does. these advocates, a former irs agents, they can do some people a great deal of help who owe back taxes and have no resources, but those are the people that the irs lets go for less than they go up. do not think that if you have no

money that the irs will be a softie. look at the deficit. they get beat up every day. they know how big deficit is. they can help certain individuals in desperate financial situations. if you know someone who is, i would certainly check the amount -- them out. we have not vetted them. host: thomas from new york. you are on "washington journal." thomas? that pushed the button? -- did i push the button? yes, go ahead. hello? caller: am i on? host: go ahead. caller: the people at the bottom should not pay taxes like everyone else, but the thing is we have to do something about

the deficit. otherwise everyone will go down in the boat. some people assume that just because people get a lot of money and are well off that they got it fair and honest. that is not necessarily the case. they cheat on their taxes, find loopholes, illegitimate the polls and stuff that cheats the rest of us. they did not get the money honestly in the first place. that is why we change tax laws and everything. i appreciate c-span. it is hard to get through sometimes. host: that is part of the deal. thank you, thomas. guest: it is interesting when people talk about the poll. it is a break someone else gets. if it is for you, it is a legitimate incentive.

when it comes to illicit league soccer games, the government tries to go after it. al capone is the big example. the government and the irs knows there is a huge underground economy. people love to do things for cash. we see and all the time. people will give you a discount if you pay in cash because they do not want any paper. it is fascinating. one big fight they are having on capitol hill is a 1099 reporting rule that they require anyone who paid a craftsman, a worker $600 or more to file a 1099. your boss has to fire -- file a w-2 for individual, independent contractors. congress passed the this. this will make us so much money

because these people will not be able to hide billions of dollars from the taxman. we know that the one place people do not cheat on their taxes is on their wages because it reported on the w-2. if you do not report the same amount on your 1040, you will get a letter. host: you are on "washington journal" with kevin mccormally. caller: good morning. thank you for taking my call. i have a minor question. i live here in harrisburg and i have to commute over 60 miles because of my lease arrangement. is there any way i can claim a sleeping room near work? in the winter i cannot drive in the horrible weather. is there any deduction i can take for the room or commute? i have looked in the tax laws

and things like that, but i have not found anything specific. guest: it is tough unless you can say that you drive 60 miles and it is a temporary assignment. the irs considers that a drop of one year or less. those expenses you are talking about are deductible, but the law is clear that commuting expenses, no matter how high or far away, to a regular job site is not deductible. i did not think there is anything. you cannot deduct mileage unless it is a temporary work place. i am afraid you are out of luck. host: year-and tax advice with kevin mccormally of the " kiplinger's personal finance." our next call from new jersey. go ahead. caller: thank you for taking my call. i have a question.

who runs the country -- the rich man or the poor man? wherever you go you find the poor health. the rich. we cannot hold the world of together. the richly pour and the poor help the rich. -- the rich help the poor. host: do you have a question regarding tax preparation? caller: my question is that we are getting the right deal. host: what do you mean? caller: the rich man gets more than the poor. we get less. if the rich man works for 100 years, the poor man gets nothing. host: was move on to minnesota.

victor, go ahead. caller: thank you for taking my call. merry christmas, america. i have a comment. what i would like to propose is that the democrats and the -- host: are you still there? i think we lost him. sorry about that. state college, pa.. caller: i want you to explain how warren buffett pays all less of a percent of his income than his secretary. when gas prices and bread is high, the have to pay more. something i did not know, which i think people would be interested in, say you make $100,000 and to assume you are taxed at a certain percentage rate. it is not true. it is tiered.

you pay a less percentage, so a millionaire is actually getting a good deal. they are not paying a full 35% or whenever it is. guest: you are right. when warren buffett is talking about is the capital gains rate. most of it is -- of his income comes from investments. i do not know how much he pays himself to run a berkshire hathaway. the tax rate on his investments are 15%. his secretary is paying probably at least 25%. that is what he is talking about. it is the tax rate for capital gains. the deficit commission says the tax rate for capital gains going forward, they want to pay the same rate. marginal tax rates are brilliant. most people do not understand it. everyone gets some of their

income non-taxable. then there is 10%, 15%, but when you get to the $1 million level, the 35% bracket kicks in around $300,000 or so. you have a pretty high average rate up to 35%, but you are right. they do not pay 20% in taxes if they make $100,000. we have a lot of information on kiplinger.com showing what you actually pay. host: diana in new hampshire. go ahead. caller: thank you for taking my call. i have a question regarding the unemployment insurance. the 99ers, as they call them, those who have through no fault

of their own lost their job, is there anything in the bill for us? guest: i do not know if they are extending a provision that allows the 99 weeks. that is not my expertise. host: is there anything in particular for those people who have been out of work for 18 months or one year, is there something they need to be aware of when preparing their tax returns? guest: that is tough. job hunting expenses are deductible, but only to the extent that they exceed 2% of your gross adjusted income. their a.g.i. is probably pretty low. this may help some people. it is really tough. we have been talking about tiered tax rates. a cruel joke is a one way to

reduce your tax bill is to reduce your income. that is one good thing is that you do not have to pay tax on money you are not earning. host: jackson, mississippi. go ahead. it works better if you turn down your television. caller: i was going to ask. i drive a vehicle -- ok, i drive a vehicle for ngo and i drive approximately 60 miles per week. do i get a tax credit in 2011? guest: if you are an employee in your car for business purposes, i think it is 53 cents per mile, but it will be in the tax forms. employee business expenses.

it is deductible only to the extent that it exceeds 2% of your adjusted gross income. that means the first $500 of those expenses do not count, so you have to watch it. if you are self-employed and using your car, you do not have to worry about that 2% rule. but the tax forms and there is a special form for business use of a car. it will have an exact per mile rate. you can deduct tolls or parking fees, but not gas. that is included in the per mile charge. host: kevin mccormally, thank you for guiding after-tax preparation for the coming year. i am sure we will be discussing this more as we continue toward april 15th. guest: thank you. host: thank you for watching this edition of "washington journal." here is who we have it tomorrow. we begin with steven dennis of the roll call